That Was The Week That Was- 2nd Week October

 

DJIA +300 Monday! A five day rally with testing of August lows successful and markets close at resistance levels. Naz and Oil up. ART CASHIN, CNBC 10/5/2015

 

 In his new book,  The Courage to Act: A Memoir of a Crisis and Its Aftermath,’ former Fed Chairman Ben Bernanke explains to readers what happened during and through the economic crisis, and what the Federal Reserve can and cannot do. In an opinion piece published in the WSJ October 5th, 2015, Bernanke enumerates the results of his Fed’s policies and criticizes U.S. and European policymakers. Bernanke took a jab at German Finance Minister Wolfgang Schauble for calling Bernanke’s second round of ‘Quantitative Easing,’ clueless. He pointed out that while today U.S unemployment is at 5.1% Europe’s had risen to 10.9% and only recently had the EU adopted an aggressive program of quantitative easing. Bernanke closes with a scolding to Congress that they need to step up. ‘It is only so much the Fed can do,’ he writes. ‘We need to improve worker skills, foster capital investment and support research and development.’ WSJ 10/5/2015.

 

The September Jobs Number Was Less Than Compelling & A Temperamental Market Dove Triple Digits at The Open Last Friday. The rose dramatically as traders realized that the Fed may not raise rates until 2016 and the DJIA closed up over 200 points. WSJ 10/2/2015

 Are Home Owner Insurance Companies in Cahoots With The Roofing Industry? Something that I discovered and thought you should know if you’re a homeowner. Be scared if your Casa Grande is 20+ years of age and has the original roof. Some insurance companies are declining home insurance coverage and cancelling others to those homes with roofs that approach or exceed 20 years. As a kid I lived in a house where if there was a leak in the ceiling someone climbed out a window with some roofing tar or a shingle and plastered the hole on the roof shut. Back then no one replaced a roof unless it was missing. Today the insurance companies are keeping an eye on potential, possible water damage because of a worn roof. Argue your roof may be perfectly fine. No leaks, shingles in good order, no curling around the edges; it doesn’t matter. Insurance companies have done their homework and reasoned that claims for roofs that are 20+ years old are costing them profits. Not only are your premiums going out of sight but insurance companies are looking to increase your deductible, as much as $5,000, which, when you think of it, could be the price of a new roof.

Keep track of homeowner and auto premiums and coverage by requesting declaration page from your insurance agent which spells everything out. You can scan and keep those pages in an insurance file on your computer. Once a year call four-five casualty firms and ask them for a quote. Compare their prices versus your new forward premiums and benefits. You won’t have to search for insurance pages and you’ll know what will be your next renewal premium. This will make your car and homeowner insurance review quick and relatively painless.

RETHINKING EQUITIES FOR RETIREMENT?

30-Year Retirement Income Withdrawal Based on Allocation. Using a 50-50 mix of stocks and bonds and a 6% withdrawal rate plus a 3% inflation rate the percentage of non-depleted assets at the end of 30-years was 53%. A 100% stock portfolio, using the same calculation, had a 83% non-depleted asset portfolio over the same time period.  Based on hypothetical $500,000 investments in the Ibbotson Large Cap Stock Index and the Citigroup Long Term High Grade Bond Index, portfolio rebalanced annually, with monthly withdrawals, and increasing each year for inflation. Rolling periods 1955-2014. Source American Funds Retirement Income Brochure Changing Dynamics of Investing in Retirement 2015.

 The Last Few Weeks I’ve Been Scouring Lists Looking for Beaten Up Quality Stocks With Great Franchise and Paying Sustainable Dividends. Here’s Your Chance to Buy That Favorite Stock at a Discount. Do your homework.

 

OIL STOCKS BOTTOMED: CHARTS SEND A BUY SIGNAL. Before the market Monday there was good trading action in the major integrated companies. Refiners, oil services and even shale oil stocks were up sharply.The energy sector seems to have found a floor, but still offers fat yields. Here is the ENERGY ETF chart.Michael Kahn, Getting Technical, Barrons.com 10/5/2015

TRANS-PACIFIC PARTNERSHIP READY TO PASS.

The TPP is a trade agreement linking 12 countries, including the U.S. and Japan, but not China. It will begin when enough countries ratify the agreement through their own domestic process. In the U.S. that seems like 2016. The deal may be fast-tracked in Congress but if politics gets in the way there may be pressure to oppose the deal or the fast track.WSJ 10/5/2015

 5 Day Winning Streak Ends Wednesday For S&P- Dow Gains 0.1%.  It was a mixed close with the S&P down and the DJIA up a tad. David Tippin and Ron Meisels think October will be as volatile as September and August. Wells Capital’s James Paulsen sees more downside before the bull market resumes. Paulsen also says that while the correction may not be over he would not tilt significantly away from equities. Cash, he explains offers zero return and bonds also exhibit significant risk in the intermediate term. –Barrons.com Commentary- Stocks to Watch.

Proxy War Heating Up in Syria. – source Business Insider.  10/6/2015 Is this Putin’s plan to see oil prices skyrocket?

IBD NEWS October 7th source:

• Not Materially Different From Quarter 2- Q3 Earnings Will Be Weak. –IBD 10/7/2015. Weakest Earnings Since 2012. Expect utilities, Consumer staples, Industrials, Materials and Energy to report 3rd quarter profit loss. A strong dollar hurting S&P 500 companies. Industrials will suffer earnings decline and revenue fall. U.S. Exports Falling Sharply- a strong dollar and weak overseas growth sent exports down 2%. IMF Cuts Global Growth View.

The ‘R’ Word is Being Whispered. cnbc.com 10/7/2015.(Recession)

Markets closed up 100+ Wednesday but the rally may have hit a ceiling, according to Michael Kahn at ‘Getting Technical’, Barron’s. Kahn reports that the charts still favor the Bears with too many negatives out there.Source Barrons.com 10/7/2015.  INVESTORS BUSINESS DAILY (IBD) ETF MARKET STRATEGY HAS A CONFIRMED MARKET UPTREND WITH 100% EQUITY INVESTMENT. IBD 10/8/2015.

There you have it. Two ways to look at the market. One shows caution going forward and the other suggests that the time to be fully invested is now. It’s these times that cause investor confusion if trying to time the market rather than being a long-term ‘buy and hold’ investor and allowing fund managers do the heavy day-to-day lifting.

  Dow, S&P and Oil all up at the close Thursday after the release of ‘Dovish’ Fed Minutes. Earnings season has begun but U.S. stocks took off after the Federal Reserve released minutes of their last meeting on why they didn’t raise rates. Citing global weakness and no inflation the Fed decided to wait for evidence of a global economic slowdown and that it was not knocking the U.S. off its economic course. Oil was up and hit a 5 week high. Investors are waiting how U.S. companies hit by slowing growth and a strong dollar will fare as earnings begins. Alcoa was first after the bell and missed. Reuters The Markets 10-8-2015. Sinead Carew.

 

Columbus Day Today & Markets Open.Questions call Paul @ 586 295 0430 or write him @ pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.

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